(Reuters) – The budget bill passed by the U.S. Senate on Tuesday and the House is debating for final approval will weaken wind and solar development, kill climate funds and boost oil, gas and coal production.
Below are some details regarding the provisions of the Energy Development and Environmental Bill.
Solar and wind tax credit
The act significantly reduced access to 30% tax credits for solar and wind power projects that were running until 2032, and developers relied on future projects.
To access grants, the project must be in service by the second half of 2027. This should begin construction a year earlier than proposed in the House bill, and within a year of adoption for the bill.
Credits also require new standards for the origins of manufactured components used in the project. Partly to boost domestic manufacturing and reduce dependence on China.
Clean manufacturing projects such as solar panels and battery manufacturing seeking production tax deductions after January 1, 2026 must also meet the requirements for these materials.
Nuclear, hydropower, geothermal
The Senate bill preserves tax credits for nuclear, hydroelectric and geothermal projects if construction begins by 2033. These forms of power generation are supported by the Trump administration.
Hydrogen, existing nuclear and carbon capture
Clean Hydrogen Tax Credits are available until the end of 2027. This is two years longer than the house suggested.
The Senate bill maintains the carbon capture and storage tax credits proposed by the Carbon Finance Committee, which stores credits for carbon utilization projects and stored CO2 and existing nuclear power plants.
Transferability
Under the Senate bill, renewable hydrogen and nuclear developers, and carbon capture, can sell their credits to third parties to raise funds to fund the project.
Greenhouse Gas Reduction Grants and Other IRA Programs
The bill withdraws all non-bligated funds from the $20 billion greenhouse gas reduction fund and former President Joe Biden’s Inflation Reduction Act.
It also cancels unused grant funds allocated by the IRA to the Department of Energy for transmission deployment and status, low-carbon construction materials, building decarbonization programs, funds allocated to help oil and gas companies reduce methane emissions, and tribal energy loans.
Home efficiency
Tax credits for households looking to improve their energy-efficient housing can only be used for projects completed by the end of 2025. For energy efficiency credits for commercial buildings, developers must begin construction by June 30, 2026. The house version does not include the elimination of the building’s tax credits.
Arctic oil and gas
The bill requires four oil and gas drilling rights to be sold by 2032 at Alaska’s Arctic National Wildlife Reserve, home to threatened species of endangered and threatened species such as polar bears. January ANWR lease sales required by the law passed by Trump’s first administration pulled out zero bids. The bill would require five lease sales in the National Petroleum Reserve Alaska by 2035 and override Biden’s lease restrictions set for 2022.
Other excavations
The Senate bill grants a four-year non-renewable drilling permit on federal land. Such permits are currently subject to annual renewal. The bill also bans several measures to streamline leases and limit environmental damage.
30 offshore lease sales are required in the Gulf of Mexico for 15 years. The Trump administration named the area the US Gulf.
Icebreaker
The bill provides $24.6 billion to procurement of U.S. Coast Guard icebreakers, planes and ports, many of which can be used to develop Arctic oil, gas and minerals.
coal
The senator attached last-minute measures that could benefit coal miners from steel production. This allows metallurgical coal producers to argue for advanced manufacturing production tax credits that allow critical minerals to be utilized. Credits of 2.5% of production costs could be worth hundreds of millions of dollars for a coal company.
The bill also reduces the royalty rates that the coal industry must pay when mining from 12.5% to 7% when mining on public land, and expands federal land leases by 4 million acres (1,618,740 hectares).
Oil Reserve
The bill violates Trump’s plan to quickly restock strategic oil reserves and reduce the amount available for purchase. This provides funding to cover around 3 million barrels of purchases, rather than about 20 million.
It will also cancel the mandatory sale from the SPR of approximately 7 million barrels. The US launched 180 million barrels of historic sales in 2022 after Russia’s invasion of Ukraine.
Reported by Valerie Volcovici, Timothy Gardner and Andy Sullivan. Edited by Alistair Bell
Share this:
